One of the most critical benefits affecting American citizens is the Medicare Program. For those individuals who qualify at age 65, this program provides health coverage for inpatient care (Part A), outpatient care (Part B), prescriptions (Part D) and other areas. This article will focus on these three most common areas of care.
To qualify for Medicare benefits, you must have worked in a job that withheld Medicare contributions from your paycheck while working at least forty quarters (i.e., 10 years). This is a very low bar to meet eligibility for such a comprehensive medical plan. Of course, as with many federal laws, exceptions apply to the general guidelines.
The important concept of medical coverage through Medicare is that it functions similar to the private insurance you may have received while employed in your career. For example, Medicare covers 80% of your covered qualified medical charges for inpatient care. This means your hospital stay may be covered but you will be expected to pay the remaining 20% unless you purchase a Medicare Supplement Plan.
Supplement plans are relatively inexpensive and can be the difference between destroying your lifetime savings and the security your family needs. There are many carriers of such plans and each state may differ as to the carriers available. It is critical that you determine the appropriate Medicare Supplement Plan you desire that is contracted with your various medical providers. Supplement plan consultants are often helpful to narrow the field of possible plans and to assist in the selection of a plan that meets your budget.
To enroll, or to change plans, you should be aware of the upcoming Open Enrollment Period. For 2022, the period is October 15 through December 7. It is critical that you review your current plan for potential savings as new plan changes and plan providers are introduced into the marketplace. Often people will purchase a supplement plan and, like the infomercial, “set it and forget it”. This is a big mistake that could cost you thousands of dollars.
Let’s review the outcomes of such a person who failed to obtain a supplement plan and suffered a significant health issue. While in the Intensive Care Unit of a major hospital, the medical care she received was excellent. She left the hospital after 10 days of care and felt so much better… until she started receiving the bills! The total cost of the hospital stay was more than $120,000 for all the medical care provided her. Without a supplemental plan, she was responsible for more than $24,000 of the total cost.
Medicare Part D is a complicated area of law. It is vital that you seriously consider enrolling in this program when you are first eligible or you will be penalized for each month you delay enrollment. This sounds rather harsh but the method of funding the program is through premiums assessed individuals who utilize the benefit. Considering that most people may live a relatively healthy life until age 75, the ten-year period of qualification to election date may cause you to incur a significant penalty at a time when you may need your savings for other priorities.
The cost of medical care continues to rise at an unprecedented pace in the United States. We highly recommend those individuals enrolling for their Medicare Benefits to seriously consider purchasing a supplement plan. Monthly premiums vary depending upon the level of care and the carrier issuing the policy.
If you are approaching your 65th birthday, it is critical that you file for your Medicare Benefits approximately 60 – 90 days prior to your birthday. It will be a lot easier to blow the candles off your cake if you aren’t worrying about medical bills. Seek the assistance of a CERTIFIED FINANCIAL PLANNER™ professional to guide you through this critical and difficult process. Make it a wonderful week!